Shining Force 2: Where am I? What next?
Solution 1:
I figured it out!
It turns out I had to take the fairy to the sick dwarf in the dwarf cave, which was just to the East of the town I last saved in, just off the river. In return, the dwarfs gave me a cannon.
Then I went to the town to the North (New Granseal?) and got some dynamite for the cannon. Now the next step is to go to the North Cliffs to blow up another cave entrance, to get to North Parmecia.
This can be found at the bottom of this page.
Mods: I'm not sure if I should answer this question or just delete it since it's probably useless to everybody else, so let me know if you want me to delete it!